If you notice alot of the newer games will give minimum system requirements for XP then for Vista. there is a reason for that. XP uses way less resources than Vista. with that computer vista is using about half of your ram just to run the os. if you want to game with a lower end machine you need to get XP.
by the way i have a custom machine with a 1.6ghz dual core 2G of ram and a BFG 7950 that will run portal perfectly on High resolution. but i am running XP. i like vista don't get me wrong but for a smaller machine it isn't the best idea. if you want to run vista you can always upgrade ram to 4G DDR2 is cheap and you can get a 2G kit for about $30